Promising Offers Lowest Price in Third Attempt to Stabilise Market

Promising, a company established in 2007 and actively works in Ethiopia.

Promising International offered the least price of 1.39 billion Br to supply 200,000tn of wheat. This comes after two attempts by the Public Procurement & Property Disposal Services (PPPDS) to procure wheat for market stabilisation.

Promising, a company established in 2007 and actively works in Ethiopia, Dubai, Ukraine, Syria, Egypt and Tunisia, offered 258.05 dollars and 262.05 dollars for a tonne of wheat for lots one and two, respectively, both of which consist of 100,000tn.

The Service floated the bid on behalf of the Ministry of Trade (MoT) on April 28, 2018, which was extended to last Friday. This was to give more time to bidders, according to Solomon Betre, director of Procurement Services and chairperson of the tender committee.

Hakan DMCC came in second place for the first lot, offering 272.15 dollars for a tonne of wheat. Hakan, a company with its headquarters in Dubai and operates in 26 countries, was not able to compete in the second lot due to an error on the financial offer document where “lot three” was written instead of “lot two.”

Midstar Singapore offered the second least price of 271 dollars for a tonne of wheat in the second lot. Midstar was established half a decade ago and is the international trading arm for the agro-commodities business unit of HSA Group that trades grains such as wheat.

The local bidder Sebrina Transit Plc – engaged in customs clearing, import, export, forwarding, transport, trading, heavy machinery rental, plastic recycling and manufacturing sectors – was the only company to offer prices in Birr for both lots.

It was disqualified as it failed to comply with the requirements of the bid document, such as compliance letter, bid security, a proforma invoice and company stamps on the documents.

“The result will be disclosed early next week, and the winner is expected to supply the wheat within a month,” Solomon told Fortune.

Just two weeks ago, Bunge SA, an Amsterdam based trading company, was revealed to have made the least offer of close to 290 million Br for the supply of 35,000tn of wheat. This bid was floated by the Service for beneficiaries under the fourth phase of the Productive Safety Net Program.

The market has recently been hit by a shortage of wheat which led to a 55pc price hike on a quintal of wheat, increasing from 1,100 Br to 1,700 Br. It was part of the price increments on the prices of grains with food inflation having reached 20pc in March this year. It has recently dipped to 16.1pc.

For this reason, the government has been attempting to procure wheat through the Service since the beginning of this fiscal year. However, the procurement has passed through controversies, making this one the third tender.

Promising had offered the lowest price to supply 400,000tn of wheat in the first bid. But during the technical evaluation, it was found that the company would use a foreign vessel instead of the one by the Ethiopian Shipping & Logistics Services Enterprise (ESLSE). The tender was cancelled after that.

But the severe need of wheat in the country convinced the Service to consider, where it was allowed to supply 50pc of the original amount. This is despite the procurement law that stresses the Service can only reconsider a firm for a quarter of the original amount.

“We were able to get permission from the Public Procurement & Property Disposal Agency”, Yigezu Daba, director of the Service, said of how Promising was able to supply half of the original amount.

Woldeamlak Bewqet (Prof.), who has more than a decade of experience in the Department of Geography & Environmental Studies and specialises in the research of climate change, believes that such dependence on import of wheat is dangerous.

“International price fluctuation will weaken the economy,” he says. “We have to address our dependency on rain, as most of the regions produce only in Meher.”

That other sectors such as service and industry are not performing as expected does not help either, according to Woldeamlak.